Forex Trading Alert: AUD/USD - Currency Bulls In Charge

Earlier today, Australia's second quarter private new capex (capital expenditure)
data showed a gain of 1.1%, beating expectations for a 0.3% quarter-on-quarter
fall. Thanks to these bullish numbers, AUD/USD extended gains and broke above
the nearest resistance levels. How much more room to rally does the exchange
rate have?

In our opinion, the following forex trading positions are justified - summary:

EUR/USD

The medium-term picture hasn't changed much as EUR/USD is still trading below
the strong support/resistance zone created by the 38.2% and 61.8% Fibonacci
retracement levels. Therefore, what we wrote on Monday is up-to-date:

(...) This is a strong bearish signal, which suggests further deterioration
and a drop to around 1.3104-1.3109, were the 70.7% Fibonacci retracement
meets the September low. (...) although the RSI declined to its lowest
level since July 2012 (while the CCI and Stochastic Oscillator are oversold)
suggesting a pause or corrective upswing, we should keep in mind that as
long as there is no invalidation of the breakdown below the green area,
another attempt to move lower can't be ruled out.

From this perspective, we see that although EUR/USD moved higher earlier today,
the orange gap successfully stopped further improvement. As a result, the exchange
rate reversed and declined, which suggests that the pair will test the strength
of the recent lows. If this area withstands the selling pressure, we'll see
a rebound and another attempt to break above the orange gap. However, if it
is broken, the next downside target for currency bears will be around 1.3109,
where the 70.7% Fibonacci retracement is. At this point, it's worth noting
that all three indicators generated buy signals. This is a positive sign, which
suggests that a trend reversal is just around the corner.

Trading position (short-term): In our opinion no positions are justified from
the risk/reward perspective at the moment.

USD/JPY

The medium-term picture hasn't changed much as USD/JPY still remains slightly
below the previously-broken resistance zone created by the long-term red resistance
line and the 70.7% Fibonacci retracement. Today, we'll focus on the very short-term
changes.

(...) the pair reversed and dropped below the orange resistance zone,
invalidating earlier breakout. Taking this bearish signal into account,
and combining it with the current position of the indicators (the RSI remains
above the level of 70, while the CCI and Stochastic Oscillator are overbought
and very close to generate sell signals), it seems to us that the next
move will be to the downside.

Looking at the above chart, we see that the situation developed in line with
the above-mentioned scenario as USD/JPY extended losses and reached its first
support area created by the bottom of the previous pullback and the 23.6% Fibonacci
retracement based on the Jul-Aug rally. This is the point where we usually
consider two scenarios. On one hand, if it holds, we'll see a rebound and a
comeback to around the recent highs. On the other hand, if currency bears do
not give up and push the pair lower, the next target will be the previously-broken
upper line of the rising trend channel (currently around 103.17), which is
reinforced by the 38.2% Fibonacci retracement. Which scenario is more likely
at the moment? Taking into account the current position of the indicators,
we still think that the next move will be to the downside.

AUD/USD

The medium-term picture has improved as AUD/USD moved higher and reched the
Aug high, which creates the upper border of the consolidation (marked with
blue). Although this resistance level could stop further improvement (and trigger
a pullback to the previously-broken long-term green support line), it seems
to us that buy signals generated by the CCI and Stochastic Oscillator will
encourage currency bulls to act. If this is the case, the exchange rate will
rally to the 2014 high of 0.9503.

Are there any short-term resistance levels that could stop the rally? Let's
check.

From this perspective, we see that AUD/USD moved higher once again and broke
above the orange resistance zone and the 50% Fibonacci retracement, which is
a strong bullish signal that suggests further improvement. Therefore, what
we wrote yesterday is up-to-date:

(...) If the exchange rate breaks above the orange resistance line, we
may see an increase to at least the brown declining resistance line (which
is currently reinforced by the 76.4% and 78.6% Fibonacci retracements).

Please note that despite this improvement, we should keep an eye on the
current position of the indicators. As you see, the CCI and Stochastic Oscillator
are quite high, which suggests that if they generate sell signals, currency
bulls may have a problem with a realization of the above-mentioned scenario.

Przemyslaw Radomski, CFA (PR) is a precious metals investor and analyst who
takes advantage of the emotionality on the markets, and invites you to do
the same.

His company, Sunshine Profits, publishes analytical software that anyone can
use in order to get an accurate and unbiased view on the current situation.

Recognizing that predicting market behavior with 100% accuracy is a problem
that may never be solved, PR has changed the world of trading and investing
by enabling individuals to get easy access to the level of analysis that
was once available only to institutions.

High quality and profitability of analytical tools available at www.SunshineProfits.com are
results of time, thorough research and testing on PR's own capital.

PR believes that the greatest potential is currently in the precious metals
sector. For that reason it is his main point of interest to help you make
the most of that potential.

As a CFA charterholder, Przemyslaw Radomski shares the highest standards for
professional excellence and ethics for the ultimate benefit of society.

Disclaimer: All essays, research and information found above represent
analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates
only. As such, it may prove wrong and be a subject to change without notice.
Opinions and analyses were based on data available to authors of respective
essays at the time of writing. Although the information provided above is
based on careful research and sources that are believed to be accurate, Przemyslaw
Radomski, CFA and his associates do not guarantee the accuracy or thoroughness
of the data or information reported. The opinions published above are neither
an offer nor a recommendation to purchase or sell any securities. Mr. Radomski
is not a Registered Securities Advisor. By reading Przemyslaw Radomski's,
CFA reports you fully agree that he will not be held responsible or liable
for any decisions you make regarding any information provided in these reports.
Investing, trading and speculation in any financial markets may involve high
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as well as members of their families may have a short or long position in
any securities, including those mentioned in any of the reports or essays,
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Nadia is a private investor and trader, dealing in currencies, commodities
(mainly crude oil), and stocks. Using her background in technical analysis,
she spends countless hours identifying market trends, major support and resistance
zones, breakouts and failures. In her writing, she presents complex ideas with
clarity that enables you to easily understand market changes, and profit on
them. Nadia is the person behind Sunshine
Profits' 3 premium trading services: Forex
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All essays, research and information found above represent analyses and opinions
of Nadia Simmons and Sunshine Profits' associates only. As such, it may prove
wrong and be a subject to change without notice. Opinions and analyses were
based on data available to authors of respective essays at the time of writing.
Although the information provided above is based on careful research and sources
that are believed to be accurate, Nadia Simmons and his associates do not guarantee
the accuracy or thoroughness of the data or information reported. The opinions
published above are neither an offer nor a recommendation to purchase or sell
any securities. Nadia Simmons is not a Registered Securities Advisor. By reading
Nadia Simmons's reports you fully agree that he will not be held responsible
or liable for any decisions you make regarding any information provided in
these reports. Investing, trading and speculation in any financial markets
may involve high risk of loss. Nadia Simmons, Sunshine Profits' employees and
affiliates as well as members of their families may have a short or long position
in any securities, including those mentioned in any of the reports or essays,
and may make additional purchases and/or sales of those securities without
notice.